Universities must raise fees or face bankruptcy, leaders warn

Universities in the UK must raise tuition fees or face bankruptcy within two years, vice chancellors and former ministers have warned.

Former universities ministers, the Conservative peer David Willetts and Labour’s Alan Johnson, and Labour peer Peter Mandelson, a former UK business secretary, said funding should be increased “urgently”.

Increases of between £2,000 to £3,500 ($2,540 to $4,445) a year are required per student to protect the sector, vice chancellors believe.

Domestic fees are currently £9,250 a year, a cost which rises to £22,200 on average for international students.

The warning came after a university leader recently said any effort by the government to further reduce the number of international students in the UK would be “calamitous”.

Prof Sally Mapstone, president of Universities UK, said attempts to limit the number of students from abroad were "unnecessary", warning the move could harm the economy, skills and jobs.

The fall in applications followed the introduction of restrictions on students bringing family over to the UK, as well as higher salary thresholds for work visas, despite a recent report by independent advisers which said the system had not been abused by those seeking to claim asylum.

Lord Mandelson, who is the chancellor of Manchester Metropolitan University, said addressing the funding crisis would require the loans system to be reformed, but fees may also have to rise in the short term.

“Universities are under huge financial pressure both because their income is falling a long way short of their costs and because some in the government actually want fewer universities and access to them,” he told The Guardian.

“This cannot be turned round overnight by a new incoming government but there will need to be some emergency uptick in resources to save both university teaching and vital research.”

Mr Johnson, chancellor of the University of Hull, said fees should “at least be restored to their pre-freeze value and then index-linked”.

Lord Willetts warned the “costs of doing nothing are rising all the time”.

“They are borne by students who have worse quality higher education experiences and there will be an increasing risk of some universities going bust,” he added.

Labour MP Margaret Hodge said fees should rise with inflation. “I think we should move to a rational debate around that,” she added.

Prof Nick Braisby, vice chancellor of Buckinghamshire New University, warned if nothing changes in the next two to three years, the situation will become “very difficult”.

“Something has to be done quickly, before the 2025-26 academic year. If it’s delayed much longer than that, some institutions will probably go under,” he said.

However, fees should remain under the “psychologically important” level of £10,000, he added.

Drop in international applications

According to a survey of 75 universities, 88 per cent reported a decrease in postgraduate applications from international students for the September 2024 intake compared with a year ago – with an aggregate decrease of 27 per cent.

Another 62 per cent of universities reported a reduction in undergraduate applications, with an aggregate decline of 5 per cent.

Despite the drop, there has been a surge in applicants from the UAE to British institutes even as EU universities offer GCC students more relaxed visas.

Russell Group, which represents 24 leading UK universities, said cutting international student visa benefits could cost top universities £500 million in the next academic year.